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Fleet ‘Stimulus Package’ Now Available

Pressure Systems International, along with Wirth Financial and Velociti, is offering a new “stimulus package” program for the trucking industry during the Technology & Maintenance Council’s annual meeting and transportation technology exhibition in Orlando, Florida. The MTIS Stimulus Package is a turn-key, buy four get one free retrofit program that will allow fleets to purchase four retrofit kits, including installation, directly from Velociti, for any axle combination and have an immediate 20 per cent savings on the cost of the MTIS by PSI product. Velociti will perform kit installations at fleet locations.(Tire Review/Akron)

11th March 2009/by Tyrepress Editors

Michelin Halts Silvania Zalau Production

Michelin’s 1,300 staff at the company’s Silvania Zalau plant in Romania will take 18 days enforced leave in March due to lack of orders. Michelin usually produces 600,000 tyres annually at Silvania Zalau, but worldwide financial turmoil has led to a drop in demand, necessitating a drop in that number. The French giant will keep its other two Romanian sites (Romsteel Cord and Victoria Floresti) running, though both will close on Sundays.

Michelin closed all three facilities early on 12 December for an extended Christmas break last year, reopening on 6 January, 2009.

10th March 2009/by Tyrepress Editors

Has Schaeffler Puts the Brakes on Merger With Conti Automotive?

Schaeffler has reportedly brought its plans to merge with Continental’s automotive wing to halt, according to Germany’s Handelsblatt newspaper. “If synergies can be had without a major merger, then it would not put a strain on the organisation,” an unnamed source told the paper. However, the ball bearing maker’s spokesman confirmed, in an email to Bloomberg, that Schaeffler will: “Continue to work on the merger of both automotive operations…But it is certainly not a process that can be completed in the coming months.”

Earlier, Hubertus von Gruenberg, a former Continental AG chief executive, resigned following what the Financial Times (FT) called a “tumultuous meeting of the car-parts supplier’s board.”

10th March 2009/by Tyrepress Editors

Superior Industries Reports $26.1 Million 2008 Loss

Wheel manufacturer Superior Industries International has reported a net loss of US$20.1 million for the fourth quarter ended December 31, 2008. This result is compares with a net income of $4.7 million for the fourth quarter of the previous financial year. For the 2008 full year, net loss was $26.1 million, compared to net income of $9.3 million in 2007.

“Our results included a number of non-recurring items related to asset impairments for the two announced plant closures, other workforce reductions, as well as an inventory write-down to recognize lower aluminium rates,” said company chairman, CEO and president Steven Borick. “In aggregate, these special adjustments totalled $23.3 million for the full year 2008. The workforce reductions and plant closings were severe measures, but steps that we believe were necessary in order to right-size our capacity and position the company to operate more efficiently. Perhaps most important, our actions will serve to protect our balance sheet and cash, allowing us to weather this unprecedented business cycle. Despite the economic challenges, we maintained a positive cash flow in 2008.

5th March 2009/by Tyrepress Editors

Cooper Reports 2008 Losses of $219 million

Cooper Tire & Rubber Co. has published losses of $219 million for the 2008 financial year. The company made profits of $120 million in 2007. 2008 group sales totalled $2.88 billion, down slightly from 2007 sales of $2.93 billion. According to a company statement detailing the financials, some of the 2008 losses can be attributed to restructuring charges from the company’s planned closure of its Albany, Georgia, tyre facility.

Cooper’s International Tire Operations division, which includes Cooper Tire & Rubber Europe, reported sales of $176 million in the fourth quarter of 2008 compared with sales of $228 million in the same quarter of 2007. According to the company, this decrease was the result of decreased volume, offset by improved price and mix. Expansion of the facilities in China was partially affected by the decrease in demand globally for tyres. The segment was also negatively impacted by a $31 million charge for impairment of goodwill. For the full year, the segment reported net sales of $975 million, an increase of 11 per cent compared with the year before.

26th February 2009/by Tyrepress Editors

Merkel: Loan Guarantees are ‘Right Tool’ for Schaeffler

Various online news sources are quoting German Chancellor Angela Merkel as saying that liquidity guarantees would be the right tool to help companies asking for public aid, such as Schaeffler Group. Chancellor Merkel said she has not seen a restructuring plan from either Schaeffler or car maker Opel, which is also requesting government support, yet. “I regard [liquidity] guarantees as the tool we are eyeing,” Merkel told journalists, according to Dow Jones. “Germany has an interest in strengthening companies which have a strong foundation,” Reuters quoted Merkel as saying.

Meanwhile, Schaeffler continues to investigate the possibility of debt-for-equity swaps as a means of paying off some of the multi-billion euro loan it borrowed to buy Continental AG. According to Bloomberg, financial institutions such as government-controlled Royal Bank of Scotland Group Plc – which backed Schaeffler’s takeover of Conti – may “saddle taxpayers with distressed assets as they negotiate debt-for-equity swaps with failing corporate borrowers.”

26th February 2009/by Tyrepress Editors

3.6 Million UK Drivers on Illegal Tyres

As many as 3.6 million UK motorists could be driving on illegal tyres, according to the latest research. Figures from the National Tyre Distributors Association (NTDA) show that of nearly 60,000 cars checked in January 2009 by retail members, 7,000 were being driven on at least one illegal tyre. Extrapolated across the population, this could amount to 3.6 million cars in the UK whose owners are at risk of causing serious road accidents. The disturbing findings are reflected by another recent survey conducted by TyreSafe, revealing that nearly one in ten motorists expects to spend less on tyres in 2009 compared with last year.

“When you consider that there are over 30 million cars on the UK’s roads, learning that one in ten motorists admits they plan to spend less on tyres shows an alarming lack of awareness among drivers towards their own road safety and the safety of the others,” TyreSafe chairman Rob Beddis commented. “Many tyre dealers have indeed reported that more drivers are letting their tyres run below the legal tread depth before they replace them as they feel the financial pinch. This is a worrying trend which sadly may result in more accidents and road deaths as a result of the loss of grip and longer stopping distances associated with illegal tyres.”

The TyreSafe research reveals that motorists in London are most likely to decrease their spending on tyres in 2009 with one in ten drivers expecting to spend less, while drivers in the East Midlands have the most responsible attitude towards replacing tyres, with less than 3 per cent expecting to spend less on tyres over the coming year.

25th February 2009/by Tyrepress Editors

Bridgestone Sustains 52% Operating Income Decrease

Bridgestone has announced its consolidated business and financial results for the fiscal year ended 31 December, 2008. The company commented in its report on the “challenging operating environment,” with its major markets in Asia, the USA and Europe declining over the course of the fourth quarter. This environment is illustrated by the worldwide 5 per cent decrease in tyre segment sales, down from 2,756 billion yen (20.54 billion pounds sterling; 1 GBP: 134 JPY) in 2007, to 2,629 billion yen (£20.05 billion), an effect in part, the company says, of the exchange impact of the stronger Japanese yen and a decline in unit sale. However, bottom line increases also hit hard, as Bridgestone tyre lost 52 per cent of its operating income; down to 92.7 billion yen in 2008 from 195 billion in 2007.

Bridgestone’s statement said that it “worked to maximise its sales momentum by introducing appealing new products worldwide, while at the same time improving and expanding strategic production sites around the world in support of respective product domains, particularly those that have been identified as strategic and important to the company’s future growth.” The fourth quarter’s decline in global automotive production and sluggish demand in the replacement market went some way to affecting the drop in sales in all three major markets.

20th February 2009/by Tyrepress Editors

Pirelli Keeping its Options Open Over Continental Tyre Purchase

Pirelli is interested in “analysing” the possibility of a friendly deal with Continental AG for at least part of its tyre business, despite denying this only last week. Pirelli chairman, Marco Tronchetti Provera, made his soft offer of interest in the company in a video interview given to the Financial Times and published online today (20 February). When asked if Pirelli had any interest in Continental/Schaeffer Tronchetti Provera answered: “It’s too early to say. But if the price is right, if we are asked to be part of a transaction, it could be interesting to analyse it – but only if it’s a friendly transaction.”

Re-iterating the early stage of Pirelli’s interest in Continental, the company’s press office issued the following brief statement later that afternoon: “With regard to comments on possible Pirelli transactions on Continental, the company declares that no transaction has been defined even along general outlines. The company also points out that, consistent with the financial rigor foreseen by the guidelines of the recent 2009-2011 industrial plan, any possible future transaction of a strategic nature would not comport any recourse to the market.” However, while the press department’s statement may have played down Tronchetti Provera’s words, earlier in February Il Mondo claimed Pirelli executives had conducted – on separate occasions – meetings with JP Morgan, Deutsche Bank, Mediobanca and a number of advisers.

20th February 2009/by Tyrepress Editors

Fitch Relegates Michelin to BBB-

Fitch Ratings has downgraded Compagnie Generale des Etablissements Michelin Long-term Issuer Default Rating (IDR) and senior unsecured ratings to a BBB- rating from BBB. According to a statement detailing the news, Michelin’s “outlook for the long-term IDR is negative.” The downgrades are said to reflect “the further deterioration of Michelin’s financial profile beyond Fitch’s previous expectation amid the accelerating downturn in the global auto markets…” Noting that the group net leverage has increased 50 per cent (to 2.7x at full-year 2008 from 1.8x at full-year 2007), the agency said it “does not expect a marked improvement in the tyre manufacturer’s financial profile before 2010.”

The analysts put the deterioration down to the slump in tyre demand the market has experienced “particularly in the fourth quarter of 2008.” Fitch expects a further decline of the global tyre markets in the first half of 2009, primarily due to significant production cuts by vehicle manufacturers. “A key issue for management is adjusting its manufacturing capacity to reflect expected volumes in the future,” the agency said in its statement.

20th February 2009/by Tyrepress Editors

Schaeffler CFO Pushed Out By Banks

Schaeffler chief financial officer, Thomas Hetmann, will reportedly resign from the automotive supplier at the instigation of the group’s creditor banks. According to various news reports emanating from the Financial Times Deutschland, the 46-year-old is negotiating the contractual conditions of his departure. In addition, the creditors have reportedly formed a crisis task force and have requested that Deloitte produces an independent picture of the company’s financial situation. Financial Times Deutschland described the move as a “clear vote of no confidence in the leadership of Schaeffler CEO Juergen Geissinger.”

18th February 2009/by Tyrepress Editors

Schaeffler Confirms Hetmann Has Resigned

Schaeffler Group has confirmed that the company’s chief financial officer, Thomas Hetmann, has left due to “differences of opinion regarding the future strategic concept of the Schaeffler Group.” According to an official statement released by the company, Hetmann has left by “mutual agreement” and will be replaced by Mary Jo Gresens, who will act as a consultant. Gresens was previously CFO at the automotive supplier between 1999 and 2006.

Meanwhile, Forbes has reported that Schaeffler is to present a revised restructuring plan to the German government in the next two week. A source “familiar with the matter” told the business magazine that the move, a requirement for receiving state aid, follows a 20 per cent drop in new orders at the company.

18th February 2009/by Tyrepress Editors

A Third of Pirelli’s 1500 Tyre Job Cuts Already Actioned

Approximately 500 of the 1500 job losses Pirelli Tyre chief executive Dr Francesco Gori announced last week have already taken place in various parts of Europe. According to a Pirelli Tyre spokesperson, this means the remaining 1000 will be spread across the company’s Western European operations. Pirelli has not released any further details of which particular sites or positions are to be affected.

Presenting the company’s financial results to an investor’s day last week, Dr Gori was clear that Pirelli (like the market as a whole) is facing a challenging environment this year. “How do we see the 2009 market? Difficult,” he said at one point. As a result Pirelli Tyre is reshaping its industrial footprint to the tune of “the equivalent” of one production plant. This means each of the remaining factories will focus on high value items – namely SUV tyres in the UK and UHP, Winter, run-flats in Germany.

18th February 2009/by Tyrepress Editors

Earnings Down Sharply at Yokohama Rubber

Yokohama Rubber has released its results for the first three quarters of the current financial year, and the company has joined the growing list of firms whose income has been severely curtailed in recent months. Operating income to December 31, 2008 declined 43.8 per cent from the same period of the previous year, to 17.3 billion yen (£134.19 million), on a 0.2 per cent increase in net sales, to 410.6 billion yen (£3.18 billion). Net income declined a whopping 99.1 per cent, to 222 million yen (£1.72 million).

Sales growth in Yokohama’s Tire Group offset a decline in the Multiple (diversified) Business Group, the company reports. Operating profitability suffered from the rise in raw material costs during most of the nine-month period, from the appreciation of the yen, and from the sharp decline in demand for tyres and hoses, which undermined productivity in those product sectors. Net income reflected the downturn in operating profitability, the effect of the strengthening yen on foreign currency–denominated sales receivables and on debt liabilities at overseas subsidiaries, and the partial relinquishment of a tax benefit associated with the write-down of unrealised gains on inventories.

13th February 2009/by Tyrepress Editors

Michelin Net Income Falls 53.8%

Michelin has reported that group sales fell 2.9 per cent in 2008, and 16 per cent in the final quarter. Net income fell 53.8 per cent, to 357 million euros in 2008 compared with 774 million euros in 2007. The financial come against a backdrop of spiralling tyre unit sales volumes (down 2.9 per cent for the year, falling a huge 16 per cent in the fourth quarter). However, when calculated at constant exchange rates, net sales reportedly grew 1.1 per cent in 2008. Either way, operating margin took a real beating falling 4.2 percentage points to 5.6 per cent in 2008.

In response to the figures, Forbes reported “investors sent shares of Michelin up 0.7 per cent, or 20 euro cents to 31.16 euros. Like Pirelli just a few days earlier, Michelin announced that it will work on enhancing plant flexibility, with an emphasis on driving further expansion in the new, high growth potential markets. In order to face the challenges that the “difficult” market is presenting, the company will cut capital expenditure to around 700 million euros.

13th February 2009/by Tyrepress Editors